By- Mala Mahto ( CS, LLB)
The Government in line with the initiative of Ease of doing business has come up with the new SMF form on FIRMS (Foreign Investment Reporting and Management System) portal. The new form has replaced the earlier reporting forms viz. ARF and FCGPR. The RBI first issued EMF (Entity Master form) w.e.f 28th June 2018 for registration of entities receiving FDI and then issued SMF (Single Master Form) and made that effective from 1st September 2018. RBI made EMF mandatory and non-filing would disable the Company and LLPs from receiving further foreign investment. EMF was the one-time filing and a time limit of 15 days was given to file form EMF.
Filing Under e-biz
Earlier Form ARF was to be filed within 30 days from the date of receiving the money and form FCGPR was used to be filed within 30 days from the date of allotment of the money through e biz portal. However, FLA return is still not part of SMF and needs to be filed separately in the manner it used to be filed.
What all forms have been subsumed though SMF:-
FC-GPR
FC-TRS
LLP-I
LLP-II and
CN
ESOP
DI
Invi
DRR
At present five forms viz., FC-GPR, FC-TRS, LLP-I, LLP-II, and CN are being made available for filing in SMF. The other four forms viz., ESOP, DI, InVi, and DRR would be made available subsequently.
Role of RBI
The new FDI filing regime has minimized the role of RBI and RBI role has been restricted to regulatory and adjudicatory functions. Now the filing is done through AD bank by creating a Business User ID. If the Company has two AD bank, two separate ID will have to be created. The Business User registration is not easy and takes time. Until and unless the AD bank approves the ID, ID will not be created and forms cannot be filed.
RBI has issued a user manual containing step-by-step instructions for data entry in EMF and later issued manually for filing form SMF.
Apart from the above, the user manual also provides detailed guidance to Authorised Dealer Banks (AD Banks) to process the forms. AD Banks would have five working days for approving or rejecting the form or sending it to RBI.
Please click here to access the link to the user manual. https://firms.rbi.org.in/firms/faces/pages/login.xhtml
FIRMS portal
As per FIRMS User Manual, it is understood that AD Banks have been given 5 working days, to, either to approve or reject or forward the form to RBI as the case may be and in case of any special issues mentioning the reason thereof. However, if there is some error it cannot be resubmitted, a fresh form is required to be filed unlike previous FCGPR form on ebiz when clarifications were asked by the AD Bank.
FIRMS Portal has been designed in such a way that on the dashboard summary of forms approved, rejected and pending approval can be viewed. In case form has been forwarded to RBI for approval or any clarifications, the status of form still shows as pending approval. It does not specify whether the same is pending at AD Bank or RBI.
Non-compliance
An entity will be considered non-compliant under FEMA, if it does not comply with the SMF filing procedure set out under the SMF Manual, or does not enter the relevant details in the EMF, or enters the details in the EMF without stating a plausible reason for the delay. In any one of these cases, the Indian entity will not be able to receive foreign investment, including indirect foreign investment.
Frequently Asked Questions (FAQ)
Q-Who can report on SMF for the entity?
A- The Business User(BU), i.e. the person authorized by the Company at the time of creating entity master and in whose favor the authorization letter was provided, shall be reporting the transactions for the entity using his login credentials.
Q- What is the pre-condition for the Business User to be able to report in SMF?
A- Every Business User has to be eKYC verified before any reporting in SMF.
Q-What is the process for eKYC verification?
A- The Business User has to register on FIRMs and select the IFSC code of the bank which would approve the eKYC and the reporting would be made in SMF.
Steps:
1. Go to the FIRMS website at https://firms.rbi.org.in.
2. At the Login dropbox, click on the Registration form for New Business User.
3. Fill the details in the registration form for BU.
4. Click Submit button. In case any error is displayed, rectify the same and click the Submit button.
5. A Message “Record Saved Successfully” is displayed on the top.
Q-What is the remedy if acknowledgment not received?
A- All Forms in SMF are processed at the AD bank level. Contact your AD bank to whom the reporting was made (as per the IFSC has chosen at the time of Business User registration).
Q- Whether ARF is required to be filed in SMF?
A- With the introduction of SMF, ARF has been discontinued effect from September 01, 2018. For more information, please refer to user manuals.
Q- Can I do resubmission of a return which got rejected on SMF?
A- No. there is no resubmission on SMF. Either the return would be acknowledged or completely rejected. For rejected ones, you can file the return as a fresh form.
Q- Whom can I contact for queries of technical nature?
A-For queries of technical nature, such as Login is not received, account blocked, application not received, user credentials not working, etc, all emails may be marked to fedsupport@rbi.org.in with a username and to be sent through registered email id.
Q- What forms are available for filing in SMF?
A- 9 forms viz., FC-GPR, FC-TRS, LLP-I, LLP-II, CN, ESOP, DRR, DI, and InVi are available for filing in SMF.
Q- Since when the filing of Form InVi is applicable?
A- Form InVi is applicable with effect from February 05, 2019.
Q- What is form InVi and who shall file it?
A- Form InVi is for the reporting of foreign inflow received in an Investment Vehicle in terms of Regulations 5(8) of FEMA 20(R). It shall be filed by the Investment vehicle within 30 days from the date of issue of units to the foreign investors.
Q- What is the regulatory time period for filing of Forms in SMF.?
A- The time period is as per Regulation 13 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 dated November 07, 2017 and as amended from time to time.
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